Big Changes Are Coming To Zelle After Alarming Scams Hurt Customers

Zelle, a popular peer-to-peer payment platform in the United States, has become a hotspot for scams. While there is a lot to know about this platform (we broke down the do's and don'ts of the app) perhaps the most important thing to know is how likely you are to be scammed while using it. In fact, according a lawsuit by the Consumer Financial Protection Bureau (CFPB), customers at some of the country's largest banks — JPMorgan Chase, Bank of America, and Wells Fargo — have lost over $870 million to Zelle-related fraud since the company started in 2017. The platform's rapid online transactions, while handy, also mean that once money is sent the wrong way it's almost impossible to get back, making Zelle a favored target for scammers. 

CFPB's lawsuit doesn't just name the three previously mentioned banks (who are co-owners of Zelle), but also Zelle's operator, Early Warning Services. The agency has accused these companies of not setting up strong enough fraud protections for consumers. Instead, the CFPB argues that in the rush to get Zelle into the market to compete with other payment apps, these banks skimped on safety measures — exposing their customers to scams. It's worth mentioning that Senator Elizabeth Warren, known for championing consumer rights, had previously pushed the CFPB to probe Zelle's fraud problems and hold banks accountable for fast-tracking fraudulent transactions. As she get her wish for safer money transfers — consumers could be in for some big changes.

One particularly significant change for Zelle users is that the company is shifting users away from Zelle's stand alone app to favor of consumers using their bank's apps instead. This shift to bank-controlled platforms means generally better monitoring and hopefully stronger defenses against fraud. By utilizing Zelle through a users' bank app, a transaction effectively piggybacks on the security inherent in that app. As Zelle shifts people from its own app to bank-managed ones, it is also providing security onboarding for new bank and credit union partner institutions. Simultaneously, Zelle plans to expand it's educational resources for consumers, in the hopes of helping them avoid scams. Zelle is arming folks with the know-how to defend themselves, highlighting the warning signs of dodgy deals like urgent payment demands and the pressure to spill personal details.

Also, starting in March 2025, Chase Bank will begin blocking and/or delaying all Zelle payments that originate from social media contacts — meaning platforms, marketplaces, and even messaging apps. These steps aim to cut down on the amount of scams that tend to start in these social channels, like the 10 worst Instagram scams that affected consumers in 2024.

While steps taken by banks and platforms like Zelle help, you are your own best guard against fraud and scams. Just like you probably know to avoid shoulder surfers at an ATM or any door-to-door sales scams, learning how to avoid Zelle scammers can help protect your money. For starters, make sure to regularly keep a close eye on your financial transactions, and to quickly report anything suspicious to your bank or Zelle. Also, it's important to always double check your recipient's details before sending any money, and to try and stick primarily to transactions with people you trust.

Another area you can help protect yourself is to tread carefully with transactions on social media, and to think twice before using Zelle for any purchases that might originate there. In fact, according to Chase, almost half of all reported scams sprang from social media interactions. On that note, turning on multi-factor authentication for your social media and banking accounts, along with setting up text and/or email alerts for your transactions can also help to cut down on any social media fueled scams. You can also boost your knowledge by keeping tabs on the latest scam trends, like phishing emails, or fake messages that look like they're from a real company or someone you trust. An estimated 3.4 billion phishing emails are sent daily by cybercriminals, many mimicking trusted sources — like banks. Make sure to steer clear of any unexpected money requests from strangers or anyone you don't fully trust.